B4 Record share activities (12 marks)

Quick Fix-It Corporation was organized at the beginning of this year to operate several car repair businesses in a large metropolitan area. The charter issued by the state authorized the following stock: Common stock, $10 par value, 98,000 shares authorized Preferred stock, $50 par value, 8 percent, 59,000 shares authorized

During January and February of this year, the following stock transactions were completed: a. Sold 78,000 shares of common stock at $20 cash per share. b. Sold 20,000 shares of preferred stock at $80 cash per share. c. Bought 4,000 shares of common stock from a current stockholder for $20 cash per share. Required:

Net income for the year was $210,000; cash dividends declared and paid at year-end were $100,000.

1. Record the journal entries of transaction a, b, c, dividends declaration and dividend payment. (10

   marks)

2. Calculate the dividends allocated to the preferred stockholders and common stockholders. (Hint:

   Use the par value of the preferred stock to calculate the dividend allocated to the preferred stockholders.) (2 marks)